Red Herrings
EN: The author was very chatty and would often go off on tangents. There was some good information among the chaff, but it wasn't really germane to the topic, so I've collected some of that information here.
Use and Abuse of Budgets
It is a stereotype, too often true, that staying on budget is over-emphasized to the point it causes dysfunctional behavior.
The author describes the case of a manager running over budget who decided to cut back on maintenance to avoid looking bad. Eventually, this wrecked a major piece of equipment (could have cost even more if someone was injured).
A healthy organization should take a more objective look at the problem, rather than beating up the manager. Find the reasons for variance: It could be that nothing is "wrong" at all (if business is booming, you're spending more to keep up with demand, and that's not a bad thing). It could identify a problem that needs to be solved (a piece of equipment is operating inefficiently and needs to be replaced). It could be a factor beyond anyone's control (the price of paper shot up unexpectedly).
Also, two things should precipitate: First, adjust the budget and obtain additional funding. Second, consider whether the variance should be documented and taken into consideration in setting future budgets.
On the other hand, there may be instances in which the variance is the result of a bad decision or wasteful activities - but this should not be one's immediate assumption.
Budget and Vision
The author suggests setting an objective - a mission or vision - for any project or department, and using that objective as a method for developing a budget. Ultimately, this objective answers the root question of "why are we spending this money?" and is much more effective as a justification or defense than merely adjusting the previous year's numbers. A mission/vision also answers some of the "big picture" questions that senior management may have.
The Outsourcing Crisis
The author makes mention of outsourcing as a method of obtaining temporary workers to temporary jobs - but in the present environment, it has become a serious problem.
Since mangers tended to favor outsourcing over working through HR (generally, because HR policies became restrictive and counterproductive), HR departments have campaigned for, and largely been successful in achieving, control over outsourcing decisions.
From the manager's perspective, this means outsourcing is no longer an option over which he has any degree of authority or control: decisions about outsourcing are made by a centralized office (HR) and policies are set on a corporate level.
In many ways, it has become like the problem of purchasing departments, originally implemented in order to exercise economies of scale, but now mean that it is a laborious process to obtain the resources needed to get things done, adding more expense and inefficiency than they save. Perhaps the pendulum will swing back?
Also, companies are increasingly recognizing that their approach to outsourcing has become the source of many problems: companies are getting the sense it has been overused, to the point where it is not efficient, and often counterproductive when the temporary workers contribute core competencies, hold institutional knowledge, and provide competitive advantage. This is an entirely different issue, beyond the scope of budgeting, but is an obstacle the modern manager must face.
Finally, it's worth noting that the line between services and personnel is becoming blurred: when you hire a company to wash the windows, are you buying a service from the company, or hiring a small staff of people for a short period of time? If the trend continues, this means that the director of the maintenance department will lose the authority to select a vendor, as that will become an HR decision.